Tag Archives: Greece liberalization

Greece is a world leader in structural reforms. Who would have thought it? Yet, this is exactly what newly published figures by the Organization for Economic Cooperation and Development (OECD) show. Greece comes top of the list in terms of applying the structural reforms the OECD has recommended during the last three years, ahead of other crisis-threatened countries such as Spain, Ireland and Portugal. Germany, Switzerland and Luxembourg take up the last three positions.

Before you wonder whether you’ve woken up in a parallel universe, there is a good explanation for Greece being in the vanguard of reforms: it had a lot of catching up to do. In terms of the labor market, for instance, Greece is currently adopting many of the policies that Germany turned to under the chancellorship of Gerhard Schroeder more than a decade ago, if not earlier. In terms of making structural changes to create a business-friendly environment, Greece is also years behind Ireland and other OECD countries. The list could go on.

The back seat of an Athens taxi has never been my favorite part of the city. In our weekly newspaper, Athens Plus, which sadly closed down last December, we ran a small block of text, a disclaimer if you like, about Athenian cabs, also known by some urbanites as the “Yellow Peril.”

Part of it read: “Athenian cabbies are an eclectic bunch of individuals. From the uncouth chain-smoker to the tourist-friendly chatterbox, the whole gamut can be found inside the yellow taxis that splutter around the city.”

Politicians often say things during election campaigns that they later regret. Looking back on his first year as prime minister, George Papandreou must be wondering what possessed him ahead of last year’s October 4 poll to utter – with excruciating regularity – the words: “The money is there.” Unless, of course, by “there” he meant in the back pockets of pensioners, civil servants, motorists and most middle and working class families that are now footing the bill for Greece’s economic rescue effort.

The money was never there and everybody, including PASOK, knew it. This didn’t stop Germany’s Werkstatt Deutschland organization from awarding Papandreou the Quadriga Prize for “Power of Veracity” on Sunday. The award, named after the sculpture of a horse-drawn chariot that sits atop the Brandenburg Gate in Berlin, was in recognition of Papandreou revealing the truth about the state of Greece’s public finances, which seems a bit like giving a lollipop to a child who admits its part in smashing a vase but only after discovering there was nowhere to hide the broken pieces.

Nevertheless, the trip to Berlin may have given Papandreou an opportunity to contemplate one of the other regrettable statements he made before last October’s election. “Socialism or barbarism,” the PASOK leader had said, echoing Marxist activist Rosa Luxemburg, a late resident of the German capital who believed adopting Socialism was the only escape from an unjust existence. Papandreou spoke in a slightly different context, arguing that the global financial crisis was proof that the capitalist model was unsustainable and that a center-left structure, with more emphasis on regulation and the state, should replace it.

However, 12 months on, his dreams of 21st century Socialism have vanished into the same vortex that is consuming the billions of euros Greeks are paying to prevent their country from going bankrupt. In the meantime, the threat of barbarism has become very real.

Some of the measures taken over the last 12 months were undoubtedly necessary and long overdue but the manner in which they are being applied and the IMF/EU market-driven philosophy that underpins them is brutal. While all eyes are trained on safeguarding financial capital, little attention is being paid to the negative effect on social capital.

The recent liberalization of the road haulage sector set a dangerous precedent. Apart from the truck owners themselves, most people would argue that time had run out on the closed-profession privileges the truckers enjoyed for so many years. Yet, it’s unsettling that the forced end to their lengthy strikes – first with a civil mobilization order in the summer and then with legislation threatening truckers with jail sentences in September – should be met with such satisfaction within the government and among some of the public. After all, this was a failure of democracy and had a distinct totalitarian element to it. PASOK backtracked on its promises to the truckers, one of the many groups that have been pampered by successive governments, and then portrayed them as being unreasonable and obstructing progress. Unable to engage in debate and then formulate policy – functions of the democratic systems we uphold and the governments we vote for – PASOK rammed the liberalization through Parliament and down the throats of the truckers. The government’s heavy-handedness throughout the dispute does not bode well for the future.

Greece’s experience is being replicated in other European countries, such as Ireland, Portugal, Spain and Britain, where citizens are being presented with a fait accompli. Their governments, regardless of political hue, are telling them that austerity measures must be adopted without question. In doing so, elected politicians are not only perverting the very system that put them in power, they’re also sowing the seeds of deep discontent as people grow increasingly aggrieved with the impact of the austerity measures and the lack of alternatives.

The United Nations work agency, the International Labor Organization (ILO), warned last Friday that the global employment market, where 22 million new jobs are needed, would not recover from the crisis until 2015 and that this would only fuel social unrest. “Fairness must be the compass guiding us out of the crisis,” said ILO director general Juan Somavia. “People can understand and accept difficult choices if they perceive that all share in the burden of pain. Governments should not have to choose between the demands of financial markets and the needs of their citizens. Financial and social stability must come together. Otherwise, not only the global economy but also social cohesion will be at risk.”

While scenarios of popular revolution are pure fiction as far as Greece is concerned, the country is no stranger to social unrest. The longer that measures which impact on people’s viability are passed one after the other, with no discussion or effort to present a vision for a better future, the more resentment will fester and the threat of a backlash will grow.

The possible breakdown of social cohesion creates the conditions for another, even darker, reaction to austerity. While understandable to some extent, the glee some citizens and commentators expressed at the abrupt way the government dealt with the truckers is a tell-tale sign that, given the current circumstances, a larger proportion of the population than usual thinks the use of force – psychological or physical – is acceptable. The danger is that the longer the government depends on this tactic, the more people will become accustomed to it and start believing it’s a perfectly legitimate way to run a country and get things done. In Greece, where society has been fragmented for many years thanks to each group pursuing its narrow interests, the flourishing of this mind-set will lead to even graver polarization.

Hungary, which was discovered in 2006 to have been fiddling its economic figures and had until this year been applying the austerity measures prescribed as part of the rescue deal it signed with the IMF, offers a salutary tale for Greece. Earlier this year, the extreme right-wing Jobbik party won 850,000 votes in the parliamentary elections on the back of a campaign that targeted the Roma but also played up the failures of the traditional guardians of power in Hungary, the conservative Fidesz and the Hungarian Socialist Party (MSZP). “The main factor behind Jobbik’s rise has been its ability to make political hay out of popular demand for extremist policies,” writes Peter Kreko for the Political Capital think tank in Budapest. “The primary driver behind extremist sentiment is a decline in public morale: Many Hungarians feel they can no longer trust the political elite or their governing institutions. The other fact is a rise in prejudice, especially toward foreigners.”

So, as Greece takes stock a year on from when Papandreou made his foolhardy election campaign pronouncements, it can draw some timely conclusions from its own and others’ experiences. It’s clear that the money is not there, nor is Socialism. As for barbarism? It’s creeping through the gates.

This commentary was written by Nick Malkoutzis and was published in Athens Plus on October 8, 2010.

“We are prepared to bleed,” they shouted. “The prospect of going to jail doesn’t frighten us,” came another cry. And so, another chapter in Greek labor relations was written. In the face of stark threats from the GENOP union representing Public Power Corporation (PPC) workers, the government has, over the last few days, backed away from the idea of selling off some of the company’s lignite and hydroelectric power stations to private firms.

It had earlier been rumored that Greece’s European Union and International Monetary Fund (IMF) paymasters had demanded that 40 percent of the electricity plants be privatized as part of wider liberalization plans the foreign technocrats want to push through. The mere inkling that such a plan was being hatched was enough to unleash the full force of one of Greece’s most potent unionist machines.

Over the years, GENOP has built up a mighty influence derived from two main sources. Firstly, there’s the blunt reality that its members have the ability to flick the power grid switch on or off if they want to put the squeeze on politicians. But it also draws power from the close relationship it has developed with PASOK. For many years, its cosy alliance with the Socialists has proved beneficial for both sides – favorable treatment and political support have proved the ying and yang of this local brand of industrial philosophy.

So, like a cantankerous but passionate Greek housewife scorned for a demure but wealthy foreign visitor, GENOP has reacted with remarkable vigor to the idea that a PASOK government would privatize the electricity sector at the behest of the EU-IMF team. For a week, you could not switch on the TV, turn on the radio or open a newspaper without coming across GENOP’s president Nikos Fotopoulos or one of his associates raging against plans to open up an industry in which PPC has a virtual monopoly.

In a calculated move, Fotopoulos sent on August 2 a slew of text messages warning that GENOP would not take any liberalization plans lying down. The principal recipients of the SMS messages were PASOK MPs. “Our struggle is not for us, it is for the consumer, and that is why we will go to extremes. We will bleed,” said Fotopoulos. “This represents the view of all workers, who were until recently your comrades.” GENOP’s accusation that PASOK was selling out such a longstanding and powerful ally made the government think twice about its plans.

Oblivious to the irony, the day after claiming it was fighting for consumers, GENOP suggested PPC should put up its prices to stave off privatization. But the government said it was already considering other alternatives to selling off power plants, hoping this would defuse the situation. Fotopoulos backed off, saying GENOP was not against the involvement of private capital per se but that it wanted firms to create infrastructure and jobs, not just take over the management of power stations that had been built with taxpayers’ money.

Portugal has shown how the involvement of the private sector can be beneficial, by allowing companies to foot a 20-billion-euro bill to help build the infrastructure the country needed to increase the amount of electricity it produces from renewable energy sources from 17 to 45 percent of its total output in just five years. In return, the firms have been guaranteed wholesale electricity purchase rates by the Portuguese government for the next 15 years.

Fotopoulos’s argument, therefore, has a distinct logic but GENOP’s rhetoric and radicalism means few will believe it’s involved in an altruistic struggle but rather a battle of survival to protect the benefits PPC workers have accrued and the influence their union possesses.

It’s a shame because, in between the diatribes and delusion, GENOP has some timely points to make. For instance, it’s right to question one of the government’s alternative ideas, which is to allow private firms to buy electricity from PPC at cost and then resell it to consumers. Fotopoulos has questioned how the Greek economy would benefit if, instead of following the Portuguese example where private capital went into the creation of infrastructure and jobs, a foreign firm enters the Greek market to act as just a middleman. It wouldn’t necessarily hire a lot of local people and could transfer its profits abroad without leaving any lasting legacy in Greece. And, if it can make more profit by selling cheap energy produced from lignite, what incentives would this company have to invest in renewable energy sources?

Fotopoulos, and other union leaders like him, are allowing crucial questions like this to go unanswered because their only reflex is to turn every development into a political battle. This serves nobody, especially at a time when politics is in a sense irrelevant to the challenges facing Greece – the reforms that have to be carried out do not bear the hallmarks of PASOK or New Democracy, they are the blueprint for a new country where the political landscape has yet to be formed. The challenges they pose are about Greece’s society, not its politics. They have to do with things such as: whether we want individually licensed taxi drivers or companies to be able to buy up permits and employ cabbies as they see fit; whether legal firms should be able to adopt a US-style “No win no fee” practice and the aggressive marketing that comes with it or whether supermarkets will be able to have their own in-house pharmacies.

The introduction of all these things will change Greece in small but incremental and noticeable ways and there is no guarantee that all the changes will be for the better. For instance, I like my pharmacist, Mr Vangelis. He’s polite and knowledgeable and I trust him to give me the right products. I don’t like the idea of buying medicines in a supermarket and I’m worried that if the Carrefour, Sklavenitis or Alfa-Vita around the corner is able to sell drugs, Mr Vangelis will soon go out of business. I would not only lose a trusted pharmacist, the neighborhood would be shorn of a professional, independently run business. It would be a blow to our community. I believe, however, there are ways of opening up Mr Vangelis’s profession so that pharmacies are more accessible and the state doesn’t have to guarantee his profit margins without damaging the fabric of our society. Liberalization does not have to be free of values or morals.

But this is a debate we are not having in Greece. Through their bloody-mindedness, the unions are forcing into a corner people who would be willing to discuss these matters and who have genuine objections to total deregulation. It seems clear that the majority will embrace liberalization because they are so fatigued with the current system. In which case, rather than engaging in a glorious, bloody battle to uphold their values, the unions will be their opposition’s secret weapon in a bloodless coup that could damage rather than improve Greece.

This commentary was written by Nick Malkoutzis and was published in Athens Plus on August 13, 2010.